Sachin is a 22 year old software engineer with a good job and a handsome salary. He was recently advised by his financial advisor about the benefits of investing early in life. He wants to invest in a good plan, but at the same time he also feels that delaying it by a few years would not make a big difference as he has just started his career. Through this article let us try to understand the benefits of early investing. Investment can be defined as the action or process of investing money for profit. Advantages of investing at a young age: 1. Advantage of time on your side - This is the most important benefit. By investing at a young age, you are able to save more money to invest and for a longer time period resulting in a higher benefits. 2. Benefit of compounding returns - According to Albert Einstein, compound interest is the greatest mathematical discovery of all time. The wonder of compounding transforms your working money into a highly powerful income-generating tool. Compounding is the process of generating earnings on an asset's reinvested earnings. To work, it requires two things: the re-investment of earnings and time. The more time you give your investments, the more you are able to accelerate the income potential of your original investment, which takes the pressure off of you. 3. Better financial security - The earlier you begin investing, the better your personal financial situation will be in future. As compared to people who chose to invest later in life, you will be able to afford things that others can’t.
4. Less responsibilities – When you are young and single you have less number of responsibilities as compared to when you are married and have children. So when you start early you have more funds to invest.
5. Money for emergencies: By investing early, you would have a comfortable backup which you can use in case of emergencies.
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